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Do You Agree with the Following Statement? Give Reason Many Factors Influence the Demand for a Commodity. - Economics

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Question

Do you agree with the following statement? Give reason

Many factors influence the demand for a commodity.

Solution

Yes, demand for a commodity is influenced by a number of factors. Some of the factors that influence the demand for a commodity are:

  1. Price of the commodity- Demand for a commodity shares a negative relationship with price. As the price of the commodity increases, the demand for it falls and vice versa.
  2. Income of the consumers- For normal goods, demand for a good shares a positive relationship with income of the consumer. As the income of the consumer increases, the demand for normal goods  increases and vice versa
  3. Price of related goods (substitute and complementary goods)- Substitute goods are the goods that are consumed in place of each other. In case of such goods as the price of one good increases, the consumer shifts its demand towards the other good. On the other hand, complementary goods are the goods that are consumed together for the satisfaction of wants. In case f such goods as the price of one good increases the demand for other good falls and vice versa.
  4. Tastes and preferences of consumers- As the consumers develop a taste and preference for a commodity the demand for it increases. On the other hand, if the taste and preference of consumers move away from a commodity, the demand for good falls.
  5. Expectations about future prices- If the consumers expect the prices to rise in future, the demand for the good increases at present. On the other hand, if the consumers expect the price to fall in future, they postpone their demand for future.
  6. Size of the population- Greater the size of population, greater is the total number of consumers, greater is the demand for the commodity and vice versa.
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 Micheal Vaz Solution for Micheal Vaz Class 12 Economics (2019 to Current)
Chapter 3: Demand Analysis
Exercise | Q: 2 | Page no. 24

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Solution Do You Agree with the Following Statement? Give Reason Many Factors Influence the Demand for a Commodity. Concept: Demand.
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